Share this Story

Borrowing Behavior in China

by Raksha Arora, Business and Economy Editor

Starting or operating a business the top reason for personal loans

Consumer debt barely existed in China in the 1990s. Today, the
scenario is quite different as the government -- fearful of a
property market bubble -- tries to increase mortgage rates and
consumer banks rush to develop a suite of credit products
aimed at eager borrowers.

At the national level, 14% of Chinese consumers say they have
applied for personal commercial loans, according to the new Gallup
Poll of China. There is a clear divergence between the rural and
urban populations, with rural Chinese twice as likely as urban
Chinese to have applied for a loan.

Why Do Chinese Take Loans?

Gallup asked Chinese who had applied for personal loans why they
applied for the loans; 42% say it was for starting or operating
businesses. The other major driver of consumer debt is
homeownership or property market speculation -- 19% of Chinese loan
applicants have applied for a loan to buy a house.

Again, borrowing behavior differs between urban China and rural
China. While borrowing funds to invest in a business is common in
both sectors (43% of urban loan seekers and 42% of rural loan
seekers report applying for loans for business purposes), urban
Chinese are much more likely than rural Chinese to apply for house
loans. More than half of urban Chinese who have applied for a loan
applied for a house loan, while only 8% of rural loan applicants
have done so.

Future Borrowing Intentions

Looking at future borrowing intentions, 19% of Chinese say they
plan to apply for a personal commercial loan in the future, and the
corresponding number in big cities is much higher. In Beijing, 28%
of consumers are thinking of taking a loan and 32% of those in
Shanghai are considering the same.

What do Chinese expect to take out loans for in the future? The
factors motivating future borrowing plans are somewhat
different from those who have applied for loans. Home loans and
business loans feature prominently among future borrowing
intentions, but consumer borrowing intentions also suggest
education and auto loans will become considerably more common in
the years to come.

In the 10 largest Chinese cities, 76% of respondents who will
apply for a loan in the future will probably take a loan to buy a
house. Auto loans are set to rise in urban China: 28% of urban
respondents who will apply for loans express an interest in taking
auto loans, as do 36% in the top 10 cities and 43% in the top three
cities.

Raksha Arora is an associate consultant at The Gallup Organization. She earned a master's degree in business administration with a specialization in finance from The Stern School at New York University, and gained investment strategy and industry analysis experience while employed with two leading global financial services firms.

Slightly more Americans agree (52%) than disagree (45%) that the federal government is responsible for making sure all Americans have healthcare coverage. This balance of views is similar to last year.

Americans' daily self-reports of spending averaged $98 in November, up from $93 in October. The latest figure is the highest average recorded for the month of November since Gallup began tracking consumer spending in 2008.

Americans are now almost evenly split on whether to amend the U.S. Constitution to replace the Electoral College with a popular vote system for electing presidents. In the past, Americans preferred the popular vote.